Soical Security and Medicare Taxes

Federal Insurance Contributions Act (FICA) taxes are deducted from an employee’s paycheck
each pay period. Commonly referred to as Social Security taxes, there are actually two
separate taxes: the Old-Age, Survivors and Disability Insurance (OASDI) tax and the Medicare
Hospital Insurance (HI) tax. For calendar 2018, OASDI applies to the first $128,700 of wages.1
HI is 1.45% of all wages.

Patient Protection and Affordable Care Act

0.9% health insurance tax: Taxpayers with incomes above certain thresholds pay an
additional HI tax of 0.9%. For an employee, the additional 0.9% effectively increases
the HI tax from 1.45% to 2.35% on income in excess of the applicable threshold. For
self-employed taxpayers, the additional tax of 0.9% effectively raises the HI tax rate to
3.8% of net self-employment income in excess of the applicable threshold. For selfemployed
individuals, the additional 0.9% tax is not deductible. The thresholds are
$250,000 in case of a joint return (the earnings of both spouses are considered) or a
surviving spouse, $125,000 in the case of a married individual filing a separate return,
and $200,000 for any other taxpayer.

Advisors may only conduct business with residents of these states and offer services for which they are properly licensed.You should consult a tax professional when applying any of these tax planning suggestions.